Much of the buzz around Advertising Week New York concerned programmatic advertising, which helps brands eliminate waste by giving them better access to the audiences that are most relevant to them.
Programmatic buying has utterly disrupted the advertising game for consumer packaged goods (CPG) brands. Pharma’s next.
Programmatic dominates the business of buying and selling digital ads — eMarketer projects that next year, 76% of desktop and mobile display ads will be bid programmatically. Consumer packaged goods giants, with their enormous ad budgets, have now signed on. The pharmaceutical industry is so far sitting this revolution out, taking a wait-and-see approach to a new technology rife with knotty regulatory issues. But as the potential benefits of greater efficiency and precision targeting become more apparent, pharma will work out the kinks and take the leap.
The programmatic adoption curve: pharma lags, but CPG has come around
With programmatic buying, a digital publisher places ad inventory on biddable ad exchanges. Advertisers can target this inventory based on audience behavior, geolocation or content relevance, and are empowered to bid on individual impressions in an auction-based environment, allowing them to reach more of their desired audience at a fair market price. Most publishers have embraced exchange-based sales across ad formats, including display, native and video.
The CPG industry was actually a late adopter of programmatic buying. While marketers in the telecom and e-commerce sectors poured ad spend into programmatic audience targeting, CPG marketers continued to focus on publisher-direct media buys. However, in 2012, new measurement tools emerged that enabled CPG marketers to quantify the impact of online advertising on offline consumer purchases, thereby optimizing their media mix in real time. The relative transparency and agility of these emerging data tools, relative to legacy publisher-direct media buys, made them tough for CPG brands to pass up. By 2014, P&G had committed to buying 70% of ads programmatically. Unilever, Kimberly Clark, and others have installed in-house teams that directly manage programmatic media execution. And digital data startups that serve the CPG marketer have been snapped up by the likes of Oracle for $1 billion-plus valuations.
For CPG brands, the benefits of programmatic buying include:
- Greater transparency, as automated buying provides much richer performance data than could a single publisher directly;
- More bang for your marketing buck — auction-based buying allows brands to bid competitively for their highest-value audiences, resulting in a more efficient deployment of ad spend;
- Speed and agility, as real-time bidding lets brands fish where the fish are now and make rapid, automated adjustments.
Today’s pharma marketer is in a similar position to the CPG marketer of 2012. Pharma marketers focus on a shortlist of trusted endemic publishers, are reticent to utilize audience targeting techniques, and have limited ability to measure the impact of digital ad exposure on real world outcomes. That’s understandable — pharma’s a heavily-regulated industry, and the potential pitfalls of programmatic buying around privacy are obvious (though manageable!). The difficulty of adapting an archaic regulatory framework to any new technology has fostered an industry culture of “stick to what we know.” But programmatic advertising is now a mature and unavoidable ecosystem, powering the great majority of digital media. In healthcare marketing, programmatic is uniquely positioned to reach key stakeholders (patients and healthcare professionals alike) at crucial points along their treatment journey.
For pharma to get to catch up with the CPG giants, there are three core problems that require attention:
- Privacy: Concerns about adjacent content and sensitivity to patient privacy issues that could trip HIPAA regulations, particularly where content is condition-specific or suggests advertiser knowledge of a viewer’s medical history. Establishing guidelines and processes requires alignment across multiple internal stakeholders (MLR, brand, CoE, etc.), something that silo-ed pharma has always struggled with;
- Vendors: Some ad tech vendors have opted to steer clear of healthcare due to regulatory concerns. Geofencing, for example, is viewed as a no-go outside of safer content such as medical conferences targeted at physicians. There are workarounds to regulatory pitfalls and quality vendors out there to help you navigate those, but good tech partners can be hard to find;
- Measurement: Measuring the effectiveness of programmatic investments is inherently tricky. It can be challenging to attribute behavioral impact, often measured by script volume, to digital advertising. Effective measurement requires a partner that understands how to connect and interpret complex online and offline data in a privacy-compliant manner.
The promise of reaching the right customer in the right place, on the right device, during crucial medical decision-making moments is a powerful one — but it demands that marketers look beyond tight networks of trusted publishers and routine buying and planning. It asks that pharma get out of its comfort zone and establish new processes for ensuring non-violative messaging. It’s a lift, but the potential rewards are too great to pass up forever.
Guest blog post by DRG Digital’s Principal Analyst, Matthew Arnold, and VP of Strategy, Erin Warner. If you are interested in learning more about how pharma can take advantage of programmatic, contact the DRG Digital team at email@example.com.
To hear more about how you can utilize programmatic buying and other technological advances to efficiently deliver content to your target market, attend Digital Pharma East, taking place October 24-27, 2016 in Philadelphia, PA. This year’s event brings together more than 800 pharmaceutical, biotech and medical device innovators who are implementing company-wide digital ecosystems to embed digital health across all channels to enhance customer experience. To learn more about this event please download the brochure or visit the website. Click here to register and be sure to mention Priority Code C649BLOG.